Valve Chief Opens Floodgates of Criticism Against Windows 8

Whatever loyalty Gabe Newell may have had to the company that made him his first millions seems to have evaporated. Now the founder of Valve is going medieval on Microsoft's upcoming new operating system, Windows 8, calling it a "catastrophe," no less. "My suspicion is that he's not talking about the OS but the balance of power in the mobile and desktop marketing space," said tech analyst Scott Steinberg.

By Peter Suciu
07/26/12 12:21 PM PT

Speaking at the Casual Connect game conference in Seattle this week, Gabe Newell, chief executive and cofounder of
Valve, had some harsh words about Microsoft's upcoming Windows 8 operating system.

The award-winning game publisher is also the creator of the Steam digital distribution service for games, and Newell seemed rather "steamed" himself about what Microsoft's new OS could mean for the PC market.

During an interview conducted by Ed Fries, the former head of Microsoft Games Studio, Newell suggested that Windows 8 would be "a catastrophe" for PC users.

Strong words from someone who actually owes his fortunes and success to his days at Microsoft. Newell, who reportedly was a producer on the first three releases of Windows, left Microsoft to found Valve in 1996, which in turn developed Steam as a way to combat piracy and provide a distribution tool for games from large publishers as well as independent developers.

Steam could thus be seen as leveling the playing field, something Windows 8 could likely disrupt.

"My suspicion is that he's not talking about the OS but the balance of power in the mobile and desktop marketing space," said Scott Steinberg, analyst for
TechSavvy Global. "He's worried that publishers and developers will cede a lot of power to Microsoft."

Valve and Microsoft did not respond to our requests to comment for this story.

Windows 8 Game as Usual

Newell's main point of contention with Windows 8 is that it could drive some top-tier PC/OEMs to exit the market, which would destroy margins.

It would be a good idea to hedge against this possibility with alternatives, he suggested.

This could very much explain the desire to bring Steam to Linux, which was announced last week. But is this a reasonable reaction?

"Until now, interoperability was the death knell for the open source OS, but with more work, data and processes moving to the Web -- and vested pushes from Google, with their Linux-based Chrome OS and related devices -- workers and consumers are becoming more device-agnostic on the desktop side of things," said Chris Silva, industry analyst at the Altimeter Group. "Obviously, Windows has never been an open system."

Moreover, with Windows 8, Microsoft is doing things the way Microsoft has always done it. Whether it works again is yet to be seen.

"Windows licensing still clings to its byzantine structure while the mobile world has begun to train users that upgrades are one contiguous set of features at one single price," Silva told TechNewsWorld. "And there are many 'flavors' of the same software, which is in stark contrast to the other models. Microsoft is mired with an obsession for choice, but it is really about giving confusion to the consumer."

Windows 8 Game Changer

While the distribution system maybe the same for Windows 8, the OS could be very disruptive in terms of the way games are accessed by users. With Windows 8, Microsoft could be adopting a strategy that has worked well for Apple -- one that Amazon is currently exploring as it enters the tablet market.

Content delivery is what this could be about, and it could very much disrupt Steam's dominance.

"Microsoft is looking to shepherd as many users as it can into is storefront with Windows 8, just as Apple has done in the mobile space," not,ed Steinberg. "That will allow Microsoft to take control of the game market. And in the process the company could take as much as 30 percent of the revenue, which only eats into the publisher and developer profits."

It is important to note that with a rise in casual gaming, the prize is not hard to see.

"The bigger issue is that Windows is easily the second largest gaming platform after mobile, and it used to be a very open market," said Steinberg. "Steam was one example of a closed system, but now Microsoft could be looking to make a walled city of sorts."

Steam Valve Closed

It could it be that Newell is just steamed that Steam could see its valves closed as Microsoft looks to provide its own content delivery system. So, is Microsoft just playing the game better, or is it taking unfair advantage with Windows 8?

In other words, the game marketplace could offer the same advantages that rivals contended Microsoft had when Internet Explorer was bundled into Windows. This could be a reason for Newell to get hot under the collar.

While this changes the dynamic, it could be about time.

"Valve pitched themselves as being a democracy in that they leveled the playing field for all," said Steinberg. "But you'll hear stories from developers that they couldn't get on Steam as the doors were already closed to them. So while the service has been successful in combating piracy, and it is hard to argue with the ease of use and the sales that Steam can produce, this has been a problem for the little guy trying to get in."

Perhaps those publishers will find Microsoft easier to work with, but only time will tell.

"Really this is just a clash of the titans over selling games," said Steinberg.